FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of _______,
2000, by and among Xxxxxx X. Xxxxx & Co. Incorporated, a Wisconsin corporation
(the "Advisor"), the Baird Funds, Inc., a Wisconsin corporation (the
"Company"), and Firstar Mutual Fund Services, LLC, a Wisconsin limited liability
corporation ("FMFS").
WHEREAS, the Advisor is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, and serves as the investment
manager of open-end investment management companies registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is an open-end management investment company that
is registered under the 1940 Act;
WHEREAS, FMFS is in the business of providing, among other things,
mutual fund accounting services to investment companies; and
WHEREAS, the Advisor and the Company each desire to retain FMFS to
provide accounting services to each of the portfolios of the Company and each
additional series of the Company listed on Exhibit A attached hereto (each a
"Fund"), as it may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Advisor, the Company and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Advisor and the Company hereby appoint FMFS as Fund Accountant of the
Company on the terms and conditions set forth in this Agreement, and FMFS
hereby accepts such appointment and agrees to perform the services and duties
set forth in this Agreement in consideration of the compensation provided for
herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated from each Fund's
investment manager.
(2) For each valuation date, obtain prices from a pricing
source approved by the Company's Board of Directors (the "Board
of Directors") and apply those prices to the portfolio positions.
For those securities where market quotations are not readily
available, the Board of Directors shall approve, in good faith,
the method for determining the fair value for such securities.
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify
them as short-term or long-term; account for periodic
distributions of gains or losses to the Company's shareholders
("Shareholders") and maintain undistributed gain or loss balances
as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Company as to methodology, rate or
dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from the Company.
(3) Account for Fund expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed
upon by FMFS and the Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share activity
as reported by the Company's transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Company.
(3) Determine net investment income (earnings) for each
Fund as of each valuation date. Account for periodic
distributions of earnings to Shareholders and maintain
undistributed net investment income balances as of each valuation
date.
(4) Maintain a general ledger and other accounts, books,
and financial records for each Fund in the form as agreed upon.
(5) Determine the net asset value of each Fund according
to the accounting policies and procedures set forth in such
Fund's current prospectus ("Prospectus").
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Fund
operations at such time as required by the nature and
characteristics of each Fund.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed upon from time
to time.
(8) Prepare monthly reports, which document the adequacy
of accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of each Fund to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio
securities.
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Company.
(4) Provide the necessary financial information to support
the taxable components of income and capital gains distributions
to the transfer agent to support tax reporting to the
Shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Funds' accounting
records available to the Company, the Securities and Exchange
Commission, and the outside auditors.
(2) Maintain accounting records according to the 1940 Act
and regulations provided thereunder.
F. FMFS will perform the following accounting functions on a
daily basis:
(1) Reconcile cash and investment balances of each Fund
with the custodian, and provide the Advisor with the beginning
cash balance available for investment purposes;
(2) Transmit or mail a copy of the portfolio valuation to
the Advisor;
(3) Review the impact of current day's activity on a per
share basis and review changes in market value.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
(2) Supply various Company, Fund, and class statistical
data as requested on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Board of Directors and apply those prices to the portfolio
positions of each Fund. For those securities where market quotations are not
readily available, the Board of Directors shall approve, in good faith, the
method for determining the fair value for such securities.
If the Company desires to provide a price which varies from the pricing source,
the Company shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Company will be
in writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Directors that affects accounting
practices and procedures under this Agreement shall be effective upon written
receipt by FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Company and the Advisor under this Agreement.
6. COMPENSATION
FMFS shall be compensated for providing the services set forth in this Agreement
in accordance with the fee schedule attached hereto as Exhibit A and as mutually
agreed upon and amended from time to time. For the Fund(s) set forth below the
Advisor's and the Company's respective names on Exhibit A, the Advisor and the
Company agree to pay their respective fees and reimbursable expenses within ten
(10) business days following receipt of the billing notice for the appropriate
Fund(s).
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
FMFS shall exercise reasonable care in the performance of its duties under this
Agreement. FMFS shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Company or the Advisor in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
FMFS's control, except a loss arising out of or relating to FMFS's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties under this
Agreement, the Company and/or the Advisor shall indemnify and hold harmless FMFS
from and against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which FMFS may sustain or incur or which
may be asserted against FMFS by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder, except for any
and all claims, demands, losses, expenses, and liabilities arising out of or
relating to FMFS's refusal or failure to comply with the terms of this Agreement
or from bad faith, negligence or from willful misconduct on its part in
performance of its duties under this Agreement, (i) in accordance with the
foregoing standards, or (ii) in reliance upon any written or oral instruction
provided to FMFS by any duly authorized officer of the Company or the Advisor,
such duly authorized officer to be included in a list of authorized officers
furnished to FMFS, as amended from time to time, in writing by resolution of the
Board of Directors of the Company or the Advisor, respectively.
FMFS shall indemnify and hold the Company and the Advisor harmless from and
against any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Company or Advisor may sustain or incur or
which may be asserted against the Company or Advisor by any person arising out
of any action taken or omitted to be taken by FMFS as a result of FMFS's refusal
or failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or power
supplies beyond its control, FMFS shall take all reasonable steps to minimize
service interruptions for any period that such interruption continues beyond
FMFS's control. FMFS will make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such a breakdown at the
expense of FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Company shall be entitled to
inspect FMFS's premises and operating facilities at any time during regular
business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and correct
administrative errors at its own expense.
In order that the indemnification provisions contained in this section shall
apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee(s) harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee(s) will use all reasonable care
to notify the indemnitor promptly concerning any situation that presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee(s) against any claim
that may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee(s) and thereupon the
indemnitor shall take over complete defense of the claim, and the indemnitee(s)
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. Except with the indemnitor's
prior written consent, Indemnitee(s) shall in no case confess any claim or make
any compromise in any case in which the indemnitor will be asked to indemnify
the indemnitee(s).
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Company and the
Advisor, all records and other information relative to the Company and the
Advisor, respectively, and prior, present, or potential Shareholders of the
Company (and clients of said Shareholders), and not to use such records and
information for any purpose other than the performance of its responsibilities
and duties hereunder, except after prior notification to and approval in writing
by the Company or the Advisor, respectively, which approval shall not be
unreasonably withheld and may not be withheld where FMFS may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Company or the Advisor, respectively.
9. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and will continue in
effect for a period of two years. After the initial two-year term, unless sooner
terminated as provided herein, this Agreement shall continue automatically in
effect for successive annual periods. This Agreement may be terminated by any
party upon giving ninety (90) days prior written notice to the other parties or
such shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
10. RECORDS
FMFS shall keep records relating to the services to be performed hereunder, in
the form and manner, and for such period as it may deem advisable and is
agreeable to the Company and the Advisor but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act, and the rules thereunder. FMFS and the Advisor agree that all such
records prepared or maintained by FMFS relating to the services to be performed
by FMFS hereunder are the property of the Company and will be preserved,
maintained, and made available in accordance with such section and rules of the
1940 Act and will be promptly surrendered to the Company on and in accordance
with its request.
11. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.
12. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of FMFS's
duties or responsibilities hereunder is designated by the Company and the
Advisor by written notice to FMFS, FMFS will promptly, upon such termination and
at the expense of the Company and the Advisor transfer to such successor all
relevant books, records, correspondence and other data established or maintained
by FMFS under this Agreement in a form reasonably acceptable to the Company and
the Advisor (if such form differs from the form in which FMFS has maintained the
same, the Company and the Advisor shall pay any expenses associated with
transferring the same to such form), and will cooperate in the transfer of such
duties and responsibilities, including provision for assistance from FMFS's
personnel in the establishment of books, records and other data by such
successor.
13. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other parties to this Agreement, or to conduct business in the
name of, or for the account of the other parties to this Agreement.
14. DATA NECESSARY TO PERFORM SERVICES
The Advisor, the Company, or such parties' agent, which may be FMFS, shall
furnish to FMFS the data necessary to perform the services described herein at
such times and in such form as mutually agreed upon. If FMFS is also acting in
another capacity for the Company or the Advisor, respectively, nothing herein
shall be deemed to relieve FMFS of any of its obligations in such capacity.
15. NOTIFICATION OF ERROR
The Advisor will notify FMFS of any discrepancy between FMFS and the Company,
including, but not limited to, failing to account for a security position in a
Fund's portfolio: within three (3) business days after receipt of any reports
rendered by FMFS to the Company; within three (3) business days after discovery
of any error or omission not covered in the balancing or control procedure, or
within three (3) business days of receiving notice from any Shareholder.
16. NOTICES
Notices of any kind to be given by any party to the other parties shall be in
writing and shall be duly given upon receipt at the following addresses:
Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
notice to the Advisor shall be sent to:
Xxxxxx X. Xxxxx & Co. Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxx
and notice to the Company shall be sent to:
Baird Funds, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxx
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
XXXXXX X. XXXXX & CO. INCORPORATED FIRSTAR MUTUAL FUND SERVICES, LLC
By: ______________________________ By: ________________________________
Title: __________________________ Title: ______________________________
BAIRD FUNDS, INC.
By: ______________________________
Title: __________________________
